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Burlington’s Bust

David Williams

February 11, 2013

When you want something done well, on time, and within budget, don’t look to the government to make it happen. Government-owned networks (GONs) epitomize the flaws and pitfalls associated with most of government “enterprise” ventures. The Coalition for the New Economy took a closer look at one of these GONs, Burlington Telecom in Vermont.

In his recent paper, Dr. Joseph P. Fuhr, Jr. explained some of the problems Burlington Telecom has experienced. As Dr. Fuhr notes “many of the problems typical with GONs: a construction plan that is behind schedule (the network is only 85 percent built); high levels of debt ($51 million to be exact); and unmet subscribership goals (despite promises of universal service, the network only serves 4,000 residents).”

Although these examples are very troubling, they don’t hold a candle to the $17 million in government subsidies the system, Burlington Telecom, “borrowed” from the city’s taxpayers. Unfortunately for Burlington’s taxpayers, the nightmare of this system doesn’t end here. No different than a bad dream that can’t end fast enough, the shortcomings inherent in GONs continue to plague the localities that misguidedly implemented the network in the first place.

In the case of Burlington, “the network has cost Burlington taxpayers more than just the $17 million loan. Issues with Burlington Telecom were some of the chief reasons Moody’s Investors Service cited when it downgraded the city’s debt rating. A negative debt rating pushes up borrowing costs for other capital projects like road and school construction.” This one poor decision will have quite the ripple-effect, leaving taxpayers in Burlington out in the cold.

Taxpayers Protection Alliance works hard to expose the shortcomings and fundamental dangers inflicted upon taxpayers when a government acts beyond its proper role. As TPA has explained before, “Taxpayers understand the need to fund essential government services like public safety and transportation. What taxpayers don’t understand is when the government ventures into areas that they have literally have no business being a part of. The failure of government owned cable television/broadband networks across the country have reminded taxpayers of the proper role of government and that taxpayer funded cable television/broadband is NOT an essential function of government.”

The blog quoted above went on to discuss Groton’s failed effort to build an independent cable company. “As the Groton Patch newspaper reported, ‘Groton City borrowed $34.5 million to build an independent cable company to give viewers choice. Last month, it sold Thames Valley Communications for $150,000 to the only taker.’” But cities in the northeast aren’t the only ones that make the mistake of implementing government-owned networks. The victims of GONs extend across the country. From Chattanooga, Tenn. to Utah to Louisiana, all are suffering the debt and financial hardships GONs impose. Other cities should take note and stop themselves from slipping into this unnecessary trap that will only bring additional frustrations and headaches to their towns.

The private sector is stepping up to the plate for deployment. According to WJAC in Pennsylvania, “Ogle Township in Somerset County is getting high-speed Internet coverage and hopes soon to eradicate a cellphone ‘dead zone,’ too. Township supervisors’ chairman Harvey Weyandt said his house just got hooked up for the service and says Verizon has also agreed to build two cellphone towers so a 16-mile stretch of Route 56 between nearby Windber and Pleasantville in neighboring Bedford County will no longer be a ‘dead zone.’ The township didn’t have to pay for the service which, Weyandt said, was achieved by ‘good old-fashioned squawking.’”

Taxpayers should demand an immediate end to taxpayer-subsidized networks because the private sector is investing billions of dollars into broadband and WiFi networks while the government trips over itself in trying to understand the ever-changing landscape of technology.